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GFMH > SEC Filings for GFMH > Form 10-K on 11-Aug-2014All Recent SEC Filings

Show all filings for GOLIATH FILM & MEDIA HOLDINGS

Form 10-K for GOLIATH FILM & MEDIA HOLDINGS


11-Aug-2014

Annual Report


Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Disclaimer Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "believes," "management believes" and similar language. Except for the historical information contained herein, the matters discussed in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this report are forward-looking statements that involve risks and uncertainties. The factors listed in the section captioned "Risk Factors," as well as any cautionary language in this report; provide examples of risks, uncertainties and events that may cause our actual results to differ materially from those projected. Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this Form 10-K.

Critical Accounting Policies and Estimates

The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the Company's financial condition and results of operations and which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies that are significant to understanding our results. For additional information, see Note 3 - Summary of Significant Accounting Policies on page 26.

The following are deemed to be the most significant accounting policies affecting the Company.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary. All significant inter-company balances and transactions are eliminated on consolidation.

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.

Use of Estimates

The preparation of financial statements in accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A change in managements' estimates or assumptions could have a material impact on the Company's financial condition and results of operations during the period in which such changes occurred.

Actual results could differ from those estimates. The Company's financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.

Revenue Recognition

We will recognize revenues in accordance with the guidelines of the Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 104 "Revenue Recognition".

Under SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably assured. The Company provides for an allowance for doubtful account based history and experience considering economic and industry trends. The Company does not have any off-Balance Sheet exposure related to its customers.

Accounts Receivable

Accounts receivable, if any are carried at the expected net realizable value. The allowance for doubtful accounts, when determined, will be based on management's assessment of the collectability of specific customer accounts and the aging of the accounts receivables. If there were a deterioration of a major customer's creditworthiness, or actual defaults were higher than historical experience, our estimates of the recoverability of the amounts due to us could be overstated, which could have a negative impact on operations.

The Company currently does not have any accounts receivable. The above accounting policies will be adopted upon the Company carrying accounts receivable.

Intangible Assets

The Company's intangible assets consist of intellectual property, principally motion pictures. The Company periodically reviews its long lived assets to ensure that their carrying value does not exceed their fair market value. There was no amortization expense or impairment for the years ended April 30, 2014 and 2013 as the useful life is not estimable.

Income Taxes

We account for income taxes under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") No. 740, Income Taxes ("ASC 740"). Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Stock Compensation

In accordance with ASC No. 718, Compensation - Stock Compensation ("ASC 718"), we measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. We apply this statement prospectively. Equity instruments ("instruments") issued to other than employees are recorded on the basis of the fair value of the instruments, as required by ASC 718. ASC No. 505, Equity Based Payments to Non-Employees ("ASC 505") defines the measurement date and recognition period for such instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the ASC 505.

Accounting for Derivative Financial Instruments

We evaluate financial instruments using the guidance provided by ASC 815 and apply the provisions thereof to the accounting of items identified as derivative financial instruments not indexed to our stock.

Fair Value of Financial Instruments

We follow the provisions of ASC 820. This Topic defines fair value, establishes a measurement framework and expands disclosures about fair value measurements.

We use fair value measurements for determining the valuation of derivative financial instruments payable in shares of its common stock. This primarily involves option pricing models that incorporate certain assumptions and projections to determine fair value. These require management's judgment.

Non-Cash Equity Transactions

Shares of equity instruments issued for non-cash consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered, or at the value of the stock given, considered in reference to contemporaneous cash sale of stock.

Fair Value Measurements

Effective beginning second quarter 2010, the FASB ASC Topic 825, Financial Instruments, requires disclosures about fair value of financial instruments in quarterly reports as well as in annual reports. For the Company, this statement applies to certain investments and long-term debt. Also, the FASB ASC Topic 820, Fair Value Measurements and Disclosures , clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.

Various inputs are considered when determining the value of the Company's investments and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.

? Level 1 - observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.

? Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.).

? Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments).

The Company's adoption of FASB ASC Topic 825 did not have a material impact on the Company's consolidated financial statements.

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets and/or liabilities carried at fair value on a recurring basis at April 30, 2014, assets and liabilities approximate fair value due to their short term nature.

The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment. As of April 30, 2014, the Company had no assets other than prepaid expenses.

Basic and diluted earnings per share

Basic earnings per share are based on the weighted-average number of shares of common stock outstanding. Diluted Earnings per share is based on the weighted-average number of shares of common stock outstanding adjusted for the effects of common stock that may be issued as a result of the following types of potentially dilutive instruments:

? Warrants,

? Employee stock options, and

? Other equity awards, which include long-term incentive awards.

The FASB ASC Topic 260, Earnings Per Share, requires the Company to include additional shares in the computation of earnings per share, assuming dilution.

Diluted earnings per share is based on the assumption that all dilutive options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options are assumed to be exercised at the time of issuance, and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Basic and diluted earnings per share are the same as there were no potentially dilutive instruments for the years ended April 30, 2014 and 2013.

Concentrations, Risks, and Uncertainties

The Company did not have a concentration of business with suppliers or customers constituting greater than 10% of the Company's gross sales during 2014 and 2013.

Recent Accounting Pronouncements

We have evaluated new accounting pronouncements that have been issued and are not yet effective for us and determined that there are no such pronouncements expected to have an impact on our future financial statements.

Plan of Operations

We have not yet enjoyed any revenues. The Company incurred a net loss of $88,143 for the year ended April 30, 2014 compared to a net loss of $114,883 for the year ended April 30, 2013. These factors create substantial doubt about the Company's ability to continue as a going concern. The Company's management plan to continue as a going concern revolves around its ability to execute its business strategy of distributing digital content, as well as raising the necessary capital to pay ongoing general and administrative expenses of the Company.

In the fiscal years ending April 30, 2014 and 2013, $39,000 and $88,600, respectively, was raised from the sale of stock for future business projects with us.

Results of Operations

Fiscal Year Ended April 30, 2014 Compared to Fiscal Year Ended April 30, 2013

Revenue

For the fiscal year ended April 30, 2014 and April 30, 2013, we have not generated any revenues.

Operating expenses

Operating expenses decreased by $26,570, or 23.3%, to $87,303 in the year ended April 30, 2014 from $113,873 in the year ended April 30, 2013 primarily due to a decrease in travel costs.

Operating expenses for the year ended April 30, 2014 were comprised primarily of $20,842 in professional fees; $33,540 in consulting services costs, stock based compensation expense of $10,750; travel costs of $12,569; rent of $4,239, advertising costs of $2,625, and $2,738 of other operating expenses.

Operating expenses for the year ended April 30, 2013 were comprised primarily of $29,474 in consulting services costs; travel costs of $29,895, equipment rental costs of $15,480, stock based compensation expense of $11,000, office rent of $14,210, professional fees of $10,955, and $2,859 of other operating expenses.

Net loss before income taxes

Net loss before income taxes for the year ended April 30, 2014 totaled $87,303 primarily due to professional fees, consulting services costs, stock based compensation expense, office rent, travel costs, and advertising costs compared to $114,063 for the year ended April 30, 2013 primarily due to consulting services costs, travel costs, equipment rental costs, stock based compensation expenses, office rent, and professional fees.

Assets and Liabilities

Total assets were $5,085 as of April 30, 2014 compared to $42,046 as of April 30, 2013 primarily the result of decreases in prepaid assets of $26,949, intangible asset of $7,085, and cash of $2,927. Total liabilities as of April 30, 2014 were $37,142 compared to $54,710 as of April 30, 2013, or a decrease of $17,568 or 32.1%. The decrease was primarily the result of decreases in accounts payable of $17,406, and accounts payable to a related party in the amount of $2,056, offset primarily by cash overdraft of $1,894.

Stockholders' Deficit

Stockholders' deficit was $(32,057) as of April 30, 2014. Stockholder's deficit consisted primarily of shares issued for services rendered in the amount of $57,750, shares issued for fundraising totaling $260,350, offset primarily by the accumulated deficit of $350,157 at April 30, 2014.

Liquidity and Capital Resources

General - Overall, we had a decrease in cash flows of $(2,927) in the year ending April 30, 2014 resulting from cash used in operating activities of $50,906, offset partially by cash provided by financing activities of $47,979.

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods indicated:

                                              Year Ended April 30,
                                               2014           2013

Cash at beginning of period                 $     2,927     $     483
Net cash used in operating activities           (50,906 )     (74,371 )
Net cash used in investing activities                 -        (4,535 )
Net cash provided by financing activities        47,979        81,350
Cash at end of period                       $         -     $   2,927

Net cash provided by financing activities was $47,979 for the year ending April 30, 2014, compared to net cash provided by financing activities of $81,350 for the year ending April 30, 2013. Net cash used in investing activities was none for the year ending April 30, 2014, compared to net cash used in investing activities of $4,535 for the year ending April 30, 2013. Net cash used in operating activities was $50,906 for the year ending April 30, 2014 compared to net cash used in operations for the year ending April 30, 2013 of $74,371 primarily due to a net loss of $88,143 for the year ending April 30, 2014, offset primarily by the change in operating assets and liabilities of $37,237.

During the year ended April 30, 2014, we entered into separate private placement memorandums with an affiliate shareholder under which we issued 2,096,333 shares of our common stock, restricted in accordance with Rule 144, in exchange for $39,000 and debt of $24,750. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was sophisticated and familiar with our operations at the time of the issuance of the shares.

Our cash needs in the year ending April 30, 2015 are estimated to be $200,000. This budget is based on the assumption that we will carry out one project at a time for which we will need about $50,000 in working capital; general and administrative expenses of $150,000 for the costs related to being public, and miscellaneous office expenses. We sold 3,373,333 shares for net proceeds of $127,600 in offerings conducted in fiscal years 2014 and 2013. As we move forward with our business plan we will need to raise additional capital either through the sale of stock or funding from shares and or officers and directors to cover our cash needs through the end of the 2015 fiscal year.

Information included in this report includes forward looking statements, which can be identified by the use of forward-looking terminology such as may, expect, anticipate, believe, estimate, or continue, or the negative thereof or other variations thereon or comparable terminology. The statements in "Risk Factors" and other statements and disclaimers in this report constitute cautionary statements identifying important factors, including risks and uncertainties, relating to the forward-looking statements that could cause actual results to differ materially from those reflected in the forward-looking statements.

Equity Financing

During the year ended April 30, 2014, we entered into a private placement memorandums with an affiliate under which we issued 2,096,333 shares of our common stock, restricted in accordance with Rule 144, in exchange for $39,000 and debt of $24,750. The issuance was exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933, and the investors were sophisticated and familiar with our operations at the time of the issuance of the shares.

We issued 5,000,000 restricted common shares to John Ballard, our Chief Financial Officer pursuant to his consulting contract dated May 1, 2014. We also issued 2,000,000 restricted common shares for professional services per consulting contracts dated May 1, 2014.

We issued 2,000,000 restricted common shares to Lamont Roberts, our President and Chief Executive Officer, pursuant to his consulting contract dated May 1, 2014. Further, we issued 25,000,000 restricted common shares to Mike Criscione, as a Director of the Company and to manage sales and marketing activities for the Company pursuant to his consulting contract dated May 1, 2014.

For the year ended April 30, 2013, we entered into separate private placement memorandums with two affiliates under which we issued them 1,772,000 shares of our common stock, restricted in accordance with Rule 144, in exchange for $88,600. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investors were sophisticated and familiar with our operations at the time of the issuance of the shares.

Sale of Asset

On November 18, 2013, the Company sold the script Gothic Harvest to an affiliate of the Company for $15,000, resulting in a gain of $5,000. The Company recorded the gain as a capital contribution. As of April, 2014, the Company had received all amounts due.

On April 14, 2014, the Company sold the script Gothic Harvest to an affiliate of the Company for $7,085, resulting in no gain or loss. As of May 31, 2014, the Company had received deposits totaling $2,000.

Distribution Rights

On February 13, 2012 the company announced that it has acquired the distribution rights to the following motion pictures: Seducing Spirits, The Perfect Argument, Marina Murders, Film Struggle, Divorce in America, A Wonderful Summer, The Truth About Layla, Living with Cancer, and The Biggest Fan. Under the distribution agreements, Goliath will receive 30% of the gross revenues for each picture it distributes. In general, the Company's distribution contracts cover both domestic and international licensing agreements; however, for the picture The Biggest Fan, the Company obtained limited distribution rights.

Amendment to Articles of Incorporation

On February 26, 2013, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary of State of the State of Nevada to increase the number of authorized common shares from 149 million to 300 million.

Contractual Obligations and Off-Balance Sheet Arrangements

We do not have any contractual obligations or off balance sheet arrangements.

Commitments and Contingencies

We did not record any legal contingencies as of April 30, 2014.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Inflation

Management believes that inflation has not had a material effect on the Company's results of operations.

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